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rob carrick

Tangerine is an an online bank owned by Bank of Nova Scotia.Ben Nelms/The Globe and Mail

The big-bank tactic of upselling customers has a nasty twin you'll like even less.

It's the downgrading of perks and features in products like reward credit cards. A fresh example is the Tangerine Money-Back Credit Card, which is not much more than a year old and already being changed for the worse.

Tangerine is Bank of Nova Scotia's nice-guy alter ego – an online bank that under previous ownership built a no-guff, clients-come-first image. Tangerine today is a case study in how big bank eagerness to sustain profit growth goes beyond the aggressive in-branch sales tactics we've heard a lot about lately.

The Tangerine Money-Back Credit Card was officially launched a little over a year ago after a test phase that began the previous October. From the get-go, this MasterCard product was praised to the sky.

"Normally I don't review consumer products, and I'm not being paid to write this post, but I genuinely think this is a great credit card that I would recommend to my personal friends," one blogger wrote. "The no fee Tangerine Money Back Credit Card is an absolute steal for cash back rookies and connoisseurs alike," said a review on

The original deal on this no-fee card: 2 per cent cash back on as many as three specific categories of spending chosen by the customer (for example, groceries, restaurants, gas and home improvement) and 1 per cent on everything else, with no limit on rewards. A great little bonus was the 1.5 per cent fee on transactions in foreign currencies, which compares to a fairly standard 2.5 per cent at other cards.

Recently, holders of this card received a notice of changes ahead. Effective April 29, the cash-back reward on purchases outside the client's chosen categories falls to 0.5 per cent from 1 per cent, while the foreign conversion fee rises to 2.5 per cent from 1.5 per cent. As well, fees for cash advances, balance transfers and exceeding your limit were raised. "VERY disappointed in the announced changes to the Tangerine MasterCard," a reader of this column wrote in an e-mail after receiving his notice.

Tangerine's position is that it still offers 2 per cent cash back in categories chosen by clients, unlimited cash-back rewards paid out automatically every month and no annual fee. "We are proud to continue to offer Canadians a market-leading no annual fee credit card in a highly competitive market," the bank said in an e-mail response to questions.

Two lessons for bank customers emerge from the changes made so quickly to the Tangerine Money-Back Credit Card after its introduction. First and foremost is that a great new deal from a bank is a temporary deal. If a product of any type clearly stands out from its peers, it won't last.

Mind you, Tangerine may have set a speed record for introducing a product and then dialing back its features. Usually, this sort of thing takes years.

The second lesson is not to be fooled by any disguises the big banks put on to make themselves appear less bank-like to customers. Tangerine is just Bank of Nova Scotia with no access to branches, a less stingy rate of return on savings and a no-fee chequing account option (which is quite good, by the way).

Watch for all the banks to disguise their inherent bank-ness with cool tools and apps for smartphones and tablets. These features work well in many cases, and you should give them a try to see if they make your life easier. But always remember there's a bank behind the scenes that is under pressure to increase profits.

As for angry holders of the Tangerine Money-Back Credit Card, they should consider the Simply Cash Card from American Express and the HSBC Premier World MasterCard as no-fee alternatives. These cards ranked second and third on a recent list of top cash-back cards as chosen by the website.

The top card? Tangerine Money-Back Credit Card, as configured when it was introduced to the masses just a year ago and served as an example of innovation rather than squeezing customers.

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